The Do's & Dont's in Rehabbing & Flipping Homes

A good flip or rehab makes an old home feel new again.

You did it. You bought the “priced to sell” house down the street and you’re ready to try your hand at real estate investment. You’ve either decided to flip the home –- make needed repairs, modernize the look and feel, and quickly put it back on the market -– or, rehabilitate the home –- make needed repairs, refurbish anything that is outdated or inconvenient, and put a little extra time and heart into the property before you sell it. Good flips and rehabs can bring solid return on investment, but agents, home inspectors and appraisers agree that adhering to a simple list of do’s and don’ts can make the difference between turning a profit and turning your dream into a money pit.

Know Your Market

First, the do’s. Do know your market. Whether flipping or rehabbing, know which improvements are essential for the neighborhood and which are also the most appealing. Invest your money in the must-have’s and can’t resists that will most attract the potential buyers specific to your location. Modernized kitchens and bathrooms are the common denominator in most markets. Buyers are drawn in when these rooms are well appointed with clean work spaces and up-to-date finishes.

Do the Numbers

You know how much you paid for the property. You know how much you are willing to invest in improvements. What about holding and closing costs? Calculating interest owed on the purchase loan, property taxes, insurance and title costs is imperative. Especially in a flip where short turnaround can be crucial to your profit margin, it’s wise to allow for a six-month safety net when figuring out how much you may need to pay in interest, insurance and tax costs.

Don't Put Lipstick on a Pig

Cleaned floors and a quick coat of neutral paint do not a flip nor a rehab make. In fact, buyers’ agents will be watching for signs of a “white out.” Chances are that you decided to flip or rehab a home because you are handy with a hammer and enjoy the work. Let your skills shine. Take the time to do quality work even if time is of the essence. If you’re not doing the work yourself, quality is still queen. Hire professionals who value good work; don’t choose a low-price leader. Also, don’t fool yourself into thinking that a deeply cleaned house is a flipped or rehabbed house. For your money, replace those veined counter tops, install new windows, tear out the old carpet, and truly repair, not patch, anything that isn’t in working condition. Quality work adds value.

Don't Live in the Past

When it comes to modernity, don’t stop with the kitchens and bathrooms. You don’t have to bulldoze anything that looks more than ten years old, but you must know the difference between what gives a house its charm and what makes it feel old and unwelcoming. Choosing what is classic over what is trendy is a good rule of thumb. Trends may cycle through again, but classics will remain constant. For example, even clean shag carpet is a trend that most buyers will not want to pay for. Beautifully refurbished hardwood floors are a classic that buyers will not want to resist. Once the do’s are done and the don’ts are avoided, stage your beautiful home and show the property at its best. Soon you’ll be pocketing your profit or investing all over again.

About the Author

Terrie Petree began writing about real estate in 2005. Focusing on home purchases, her work has been published in the “Communicator” magazine. She won an Apex award for her 2006 investigative series about the dangers of subprime lending. She has a Master of Arts in American literature from San Diego State University.